Sunday, January 15, 2006

URA to release more detailed property data

Business Times

(SINGAPORE) The Urban Redevelopment Authority (URA) will release more information on the property market, including the creation of three price indices based on newly defined geographical regions.

It will also release data on sub-sale activity and provide the numbers of approved housing units in the pipeline, regardless of whether developers choose to launch these or not.

Explaining the rationale for these moves, Minister for National Development Mah Bow Tan said: ‘Members of the public are concerned about the level of speculative activity in the market. Some people think it’s going a bit too high, and too much.’

‘If the pipeline is strong, then it indicates that there is more than enough housing for people and that there is no need to rush,’ he added.

Mr Mah, who was speaking on the sidelines of the Edusave Scholarship and Merit Bursary Presentation Ceremony at Festival Park, Tampines, yesterday, also said: ‘Our desire is to provide for a more transparent market. Otherwise you get developers trying to talk up the market or people who have not bought yet trying to talk down the market.’

The additional data will be more ‘comprehensive’ and ‘holistic’, he said.

Flash estimates for Q4 2006 property price index released earlier this month revealed that the index had increased by 10 per cent year on year.

Some property analysts questioned whether this trend was reflective of the market, as mass-market prices had increased by only about 3 per cent, while high-end property prices were estimated to have soared by over 30 per cent.

Separate indices for different segments of the property market will provide a more disaggregated - and therefore more accurate - picture of the market.

By releasing data on sub-sale activity, the URA will also be providing a means to more accurately measure the degree of property speculation.

A sub-sale is broadly defined as the resale of a property bought directly from a developer prior to official completion of a new development.

The release of sub-sale figures could be seen as a tacit warning that the government is monitoring speculative activity. But as Mr Mah pointed out: ‘Speculative activity is part and parcel of any market.’ He added that he was in favour of letting the market ‘find its own level’.

Mr Mah also reiterated that the decision to provide more property data in no way suggests that the government was also looking into either releasing more sites for development (on top of those announced in its Government Land Sales programme) or that capital gains tax on property transactions could be introduced in the future. ‘That would be speculation on your part,’ he said to the assembled media.

The new property data will be released starting on Jan 26, together with the existing property price index (PPI). So far, industry players have responded to the upcoming changes positively.

Kwek Leng Joo, managing director of City Developments Ltd, owner of Singapore’s largest residential land bank, said: ‘We welcome this move as it will provide a clearer indication of property prices for the different segments of the market.’

The different segments or regions that the three new indices will focus on are: 1) Core areas of District 9, 10 and 11, as well as Sentosa and parts of Downtown CBD; 2) The Central Region (excluding the areas included in the first index) and; 3) Outside the Central Region.

Knight Frank director (research and consultancy) Nicholas Mak, who also welcomed the move, said it will ‘allay anxiety that growth in the high end market is causing runaway inflation’.

Mr Mak also pointed out that although this new data is already available to industry players who subscribe to URA’s property data base called Realis, ‘consultants have in the past been free to come up with their own sub-indices’.

‘The new indices will have a more authoritative position,’ he said.

Chesterton International head of research and consultancy Colin Tan, who believes the existing PPI can be used to ‘talk up the market’, also welcomed the new indices as they will help confine this practice to ’speculative properties’.

Mr Tan also reckoned that a price index that covers private property outside the Central Region will help allay fears in the mass market and prevent ‘panic buying’.

Savills Singapore director (marketing and business development) Ku Swee Yong said that foreign buyers, who are largely credited for pushing up prices of high-end properties, will also see the move as positive. ‘Most will be happy because it will show that Singapore’s property market is transparent,’ he said.

Mr Ku expects that the data on sub-sale activity will confirm his belief that property speculation is still negligible. ‘Speculative activity is only confined to about 500 units,’ he said.